The Metropolitan Museum of Rot

The shrinking future of the American city

Americans are used to hearing the story of our decrepitating urban life as one of cultural, moral, and even spiritual decline—as though cities were still the demonic precincts of bunko and vice featured in the grim third acts of Victorian melodramas. As satisfying as such histrionics may be for the more didactic moralists of village life, the chief relations that define the livability of our cities are economic. Just ask the long-suffering residents of Flint, Michigan, who weathered the first great wave of manufacturing flight during the 1990s, only to find two decades later that—thanks to phony cost-cutting measures by a Republican state government on a rabid binge of privatization—they’d been left paying exorbitant bills for poisoned drinking water.

Or consider, on the other side of the coin, the gleaming face of our country’s most storied metropolis. One spring day not so long ago, I had a low-grade epiphany walking across New York’s Central Park from my hotel on the West Side to the Metropolitan Museum of Art off Fifth Avenue. First, I noticed that the park was in absolutely immaculate condition, in better shape than ever before in my lifetime, going back to my 1950s school days. The Sheep Meadow was now a lush greensward—a vivid contrast to the brown hardpan wasteland it once had been. The Bethesda Terrace beside the lake and the adjoining Great Mall, with its once-crumbling Naumberg bandshell, were all fixed up. Vanished original buildings like the Dairy, designed by Olmsted and Vaux in the 1850s and then lost to decay, had been meticulously reproduced. This miracle, I realized, was altogether a product of the financialization of the U.S. economy. Over recent decades, a Niagara of money had flowed into the tax-deductible mission of the Central Park Conservancy.

It was a short leap from there to the realization that over the past quarter-century every formerly skeezy neighborhood in Manhattan had undergone remarkable renovation: the Bowery, Alphabet City, Times Square, the Meatpacking District, and even Harlem, not to mention the practically whole new nations of Brooklyn and now Queens. Well, all those hedge funders needed someplace to live; so did those working in other well-paid but less-exalted professions: show business, fashion, media, and computer tech. Across all the boroughs it was the same story: the financialization of the economy, and the resultant widening disparities of income between Wall Street and the rest of the nation, had concentrated immense wealth in Gotham.

When I was a young man in the 1970s, New York was on its ass. Bankrupt. President Gerald Ford was famously said to have told panhandling mayor Abe Beame to “drop dead.” Nothing was being cared for. The subway cars were so graffiti-splattered you could hardly find the doors or see out the windows. Times Square looked like the place where Pinocchio grew donkey ears. Muggers lurked in the shadows of Bonwit Teller on 57th and Fifth. This was the climax of the postwar diaspora to the suburbs. The middle class had been moving out of the city for three decades, leaving behind the lame, the halt, the feckless, the clueless, and the obdurately “risk oblivious” cohort of artsy bohemians for whom the blandishments of suburbia were a no-go state of mind. New York seemed done for. Meanwhile, other American big cities were likewise whirling around the drain. Detroit, Cleveland, Chicago, Cincinnati, St. Louis, Milwaukee, Baltimore, and Washington, D.C.—horrors. Even San Francisco was a dump in the cold, dark, pre-dawn years of the dot-com age, at least when I lived there in 1974–1975.

Meanwhile, Sunbelt metroplexes such as Atlanta, Houston, Dallas, Charlotte, and Phoenix were booming back then, but not in a way that made any sense in traditional urban terms. They merely expressed the most exaggerated characteristics of suburban sprawl in new and horrifying ways: downtowns decorated with “signature” office towers that went utterly lifeless after 5 p.m.—because nobody lived there. The donut-hole cores of these conurbations were all surrounded by vast asteroid belts of suburban chain store dreck and tract housing monotony, dominated by tangles of freeways.

These new crypto-urban agglomerations had been hardly more than tank towns before 1945, so even their worst car-dependent features and furnishings were pretty new—that is to say, not yet subjected to the ravages of time. They were typologically different from the older U.S. cities like New York.

Thinking of the bifurcated urban scene bequeathed to us by the postwar planners and financiers brought on the second part of my Central Park epiphany. It suddenly occurred to me that I was witnessing the absolute peak of a cycle in the life of New York—that from this point forward things would start falling apart again, and the shockwaves this time would probably be worse than they were in the 1970s. I’ll elaborate on the particulars of that presently, but first I must describe exactly what the financialization of the economy was about and why it is coming to a bad end.

Slouching Toward Sprawl

Contrary to the American religion of endless progress, the techno-industrial age is a story with a beginning, a middle, and an end, and we are closer to the end of that chapter in human history than to the middle of it. By the 1970s, the United States began to feel the bite of competition from other parts of the world that had rebuilt their industrial capacity following the Second World War. Our factories—which had not been bombed during the war—were old and worn out. Environmental consciousness produced stringent new regulation of dirty industries. Third World nations with rising populations offered ultra-cheap labor and lax regulation. So we offshored U.S. industry, which for a century had been the major source of our economic wealth.

Industrial production was replaced mainly by two activities. First, after the limits imposed by the oil crises of 1973 and 1979, the build-out of suburban sprawl resumed with a vengeance in the 1980s. Second was the expansion of the financial sector of the economy from around 8 percent of overall profits to around 40 percent, fueling sprawl via the mortgage racket.

The suburban sprawl renaissance was easy to understand; it was the preferred template for property development, which had taken shape during the great postwar boom. Over the next few decades, local zoning and building codes had evolved to mandate that outcome by law. The separation of uses became ever more extreme: housing tracts here, office parks there, shopping somewhere else, connected solely by cars. You couldn’t build a popsicle stand anywhere in the United States without supplying fifteen parking spaces.

By the 1990s, new laws for handicapped access had the unintended consequence of heavily discouraging buildings over one story, which made it even more difficult to create a mixed-use urban fabric.

The tragic part of this recursive post-’70s retreat into still more suburban sprawl is that the car-based suburb was always a living arrangement without a future. The oil crises of the ’70s had portended this, but the iron grip of the zoning codes and the cultural conditioning—imbued in everything from the widespread hostility toward government planning to property-tax funding for schools—drowned out that unmistakable warning. Americans simply couldn’t conceive of living any other way.

On Debt and Dying

But the ineluctable logic of our ongoing economic collapse means that we have no choice but to start living differently. Here we encounter the deeper ruin of financialized America—in which Central Park’s lush greenswards benefiting America’s 1 percenters stand in tragic contrast to the dying strip malls and sclerotic raised ranch housing tracts of the 99 percenters. Back when finance was a mere 5 or 10 percent of the economy, banking was boring and didn’t even pay so well. It was based on the 3-6-3 formula: borrow money at 3 percent, lend it out at 6 percent, and be on the golf course at 3 o’clock. In the 1960s, bank presidents and stockbrokers might have had color TVs instead of black-and-white, and they might have driven Cadillacs instead of Chevrolets, but they didn’t live on another planet of ultra-wealth. The role of banking in the economy was straightforward: to manage society’s accumulated wealth (capital) and redeploy it for productive purposes that would produce yet more wealth.

The computer revolution of the 1990s helped take finance to a whole new level of hyper-complexity with astonishing speed, and because the diminishing returns of technology always bite, this venture produced some ferocious blowback—namely, that many of the new “innovative” financial instruments created by computer magic enabled swindling and fraud on a scale never seen before. This was especially true in the securitization of mortgage debt into fantastically complex mutant bonds, many of which were notoriously designed to blow up and reward their issuers with bond “insurance” payouts. That led to the crash of 2008. The systemic damage of that event was never resolved but simply papered over by taxpayer bailouts and massive Federal Reserve “interventions” that continue to the present.

This chain of events entailed an unprecedented growth of debt at all levels of society (household, corporate, government) such that the obligations eventually outstripped any plausible prospect of repayment. Something very sinister and largely unacknowledged lay behind it: real economic growth in the old developed nations had sputtered (and was soon to sputter in the “emerging” economies, too). And behind that was the fact that the world had run out of affordable petroleum. There was still a lot of oil left in the ground, but it cost too much to get out—whatever its “market” price ended up being. Without ever-increasing supplies of cheaply-produced oil, you couldn’t get economic growth; without that growth, you couldn’t pay back the interest on the ever-increasing debt that was needed to get the oil out of the ground—and to run industrial societies generally.

This quandary went totally unacknowledged in the public discourse. If anything, the authorities—business leaders, the media, politicians—had gotten the story all wrong with their blather about “energy independence” and “Saudi America.”

The peak-oil story worked out rather differently than even close observers had imagined ten years ago. It could be boiled down to a simple equation: oil above $75 a barrel crushed industrial economies; oil below $75 a barrel destroyed oil companies.

The Ponzi scheme known as the “shale oil miracle” only extended the damage in the bond markets and postponed the energy reckoning by a few years. The shale oil companies weren’t making money when the stuff sold for $100 a barrel in 2014, but the high price succeeded in crushing the economy. Then, when demand cratered and the price of oil fell to under $40 a barrel, the shale oil companies started to go bankrupt, because it still cost them $75 to pull it out of the ground, and they had to keep pumping it out to maintain cash flow to service their junk-bond financing.

I dwell on these arcane matters because they’re crucial in highlighting a single, awful truth: the root cause for the sputtering of economic growth is that the primary resource needed for creating it (oil) has exceeded our ability to pay for it—and despite all the wishful thinking, there is no alt-energy rescue remedy waiting in the wings to replace it. Hence, we’ve been borrowing from the future (piling up debt) to keep the vast, complex systems of advanced civilization running. And now, our ability to pile on ever more debt has run out.

The result will likely be a collapse of our complex systems and a reset of human activity to a lower and simpler level. How disorderly the process gets remains to be seen, and where it stops is as yet unknown. But it will have everything to do with how human life organizes itself on the ground, and therefore with the future of our cities.

One can state categorically that the colossal metroplex cities of today are going to have to contract, probably substantially. They have attained a scale that no plausible disposition of economic resources can sustain in the future. This is contrary, by the way, to most of the reigning utopian (or even dystopian) fantasies that presume only an ever-greater scale of everything. The renovation of New York City circa 1990–2015 was enabled by Wall Street’s management role in the era’s supernatural debt growth, combined with the skimming of fees, commissions, and bonuses by bankers, once the deregulated mania for derivatives and mortgage-backed securities was combined, to toxic effect, with pervasive accounting fraud in both private business and government. This enormous con job is what brought us the renovated neighborhoods, the scores of new residential skyscrapers, the multiplication of museums and cultural venues, and the buffing up of Central Park. It will be followed by a steep and harrowing descent into disinvestment.

Cities Off the Plain

It must be said that the recent rediscovery of city life in America, per se, was a positive thing, given the decades-long experiment with automobile suburbia. It’s hardly surprising that generations raised in that vapid climate- and soul-killing milieu desperately sought something better, denser, and more active.

Notice, though, that the revival of cosmopolitan life mainly took place in those cities most connected to the financialized economy: New York, Boston, Washington, Chicago, and San Francisco. Cities like Detroit, Cleveland, Buffalo, St. Louis, Kansas City, and other “flyovers” continued to sink even as the new starchitect condo towers rose up over lower Manhattan. It was also unfortunate that few small cities and towns benefited from the re-urbanization movement.

Most cities are located where they are because they occupy important geographical sites. New York has its excellent deep-water harbor and the Hudson River estuary. These outstanding amenities were enhanced later with canal connections to the Great Lakes and the St. Lawrence River. San Francisco and Boston likewise sit on great harbors. Detroit stands on a strategic river between two Great Lakes. And so on. Human settlements will continue in these places as long as people are around, though these urban organisms may be very different in scale and character from what we have known them to be. Detroit will probably never again be the colossus it was in 1950, but something will occupy that stretch of riverfront.

The anomalous techno-industrial economy, on the other hand, allowed cities to develop rapidly in places that lacked outstanding natural features. Denver and Atlanta grew up around railroad depots, provisional human constructs that may or may not have value going forward, given the extreme neglect of our once-excellent rail system. Places like Phoenix, Tucson, Las Vegas, and much of Southern California may become uninhabitable without cheap air conditioning for all, a viable automobile-based transport system, and the ability to produce food locally. Cities in the “wet sunbelt,” such as Miami and Houston, may succumb to rising sea levels. Orlando may decline into irrelevance when its theme-park economy withers.

The sheer scale of our metroplex cities is inconsistent with the resource and capital realities of the future. Just about everything in our world is going to have to get smaller, finer, and more local. The failure of suburbia is pretty clear, and its trajectory isn’t hard to understand. But do not assume that there will necessarily be a great demographic rush into the big cities as suburbia fails. Older central cities will have enormous trouble with their aging infrastructure—their one-hundred-year-old water and sewer systems, stupendous hierarchies of paved roads, bridges and tunnels, etc. The American electrical grid is decrepit, and the estimate for fixing it now runs nearly $500 billion.

Debt-strapped cities will also have trouble fulfilling their promises of support for public employees and dependent populations. These places will have to contract around their old centers and their waterfronts, if they have them. This will entail the loss of vast amounts of notional wealth represented in buildings and real estate, perhaps provoking conflict over newly or still-valuable districts.

New York City and Chicago face an additional problem: an extreme overburden of skyscrapers. Though our society does not know it yet, the skyscraper is already an obsolete building form, and for a reason generally unrecognized: they cannot be renovated. They have no capacity for adaptive reuse—and they will be unable to draw on diminishing reserves of capital to carry out renovations at the giant scale at which they were originally built. There’s also a good chance that many manufactured modular-building materials will not be available, either. Take the most common material in contemporary construction—gypsum board, a.k.a. sheetrock. It might seem to be a humble item, but it actually requires very long and sophisticated mining and manufacturing chains, and there’s no guarantee that these supply chains will continue to operate in the years ahead. The same can be said of steel beams and trusses, aluminum sashes, metallic and enamel claddings, plate glass, concrete block, cement, plastic and metal pipe, silicon gaskets, plywood, etc. In short, these enormous buildings, now considered assets, will quickly turn into liabilities.

This outcome is unrecognized largely because under current conditions the professionals involved—developers and architects—cannot resist the temptation to maximize the floor-to-area ratio of any given urban building lot. Why stop at six stories when the zoning law allows sixty? Why make only $10 million on any given parcel of land when you can make $100 million in sales and commissions? They simply can’t imagine behaving differently.

But in the future, a new consensus may eventually form that the scale and height of new buildings must be a lot more modest. (Central Paris, to take just one striking example, is still mostly composed of buildings under seven stories, without detracting from its cosmopolitan verve.) Given likely future constraints, we may decide that the maximum building height is keyed to the number of stories you can ask people to walk up comfortably.

With the new mandate to scale down urban construction comes another likely shift in the basic makeup of our cities, also not widely recognized: the potential failure of the condominium model of property ownership. Also known as deconstructing the rights of real estate, this experimental system, in which ownership is portioned out among individual apartment dwellers and managed under a corporate property-owners association, has been tried only on a mass basis since the 1970s. That is to say, we’ve experienced it only on our way up a colossal mountain of debt creation. We have no idea what’s going to happen during the period of destructive debt default we have now entered. It takes only partial failure of a condominium building—apartment owners defaulting on their mortgages and failing to pay association dues—for the property association to fail, meaning that afterward there will be little provision for maintenance and repair of the building.

Do not assume that our current financial arrangements have any innate resilience. Like other elements of this story, they seemed like a good idea at the time. But times change.

Let’s Get Small

Squinting a bit further out on the time horizon, one can also speculate that the locus of settlement in the United States is headed for an even more striking change—namely, that much of future economic activity is going to shift to the small cities and towns, especially places that are scaled to the resource and capital realities to come, and which exist in a meaningful relationship to food production. These places are currently the most derelict and disinvested in the nation, but I would argue that they are about to regain importance.

For one thing, the global economy is unwinding. It never was a permanent installation in the human condition, contrary to what Tom Friedman and Fareed Zakaria might say. That global economy was the product of special circumstances, namely a hundred years of super-cheap energy, and about seventy years of relative peace between the world’s major powers. Those conditions are now ending, and the transient globalized economic relations that flourished under them—the chain of products moving from the factories of Asia to the Walmarts of America—are coming to a close.

As a result of this broad contraction, the North American economy will be much more internally focused in the years ahead. We will have to rely on what we can produce closer to home—and this production is sure to be at lower levels than what we are used to.

Among other things, this upsurge in local production will likely lead to the resurrection of America’s inland waterway system, which will also mean the rebirth of many towns and cities alongside it. Places like Cincinnati, Louisville, Buffalo, Duluth, and Memphis will regain importance, though probably not gigantic scale. Do not assume that the trucking industry will continue to function, or that we will make the necessary reinvestment in our existing rail lines. It’s likewise folly to believe that any models of our current commercial system will continue as we know them, including national chain-store shopping, the supermarket method of food distribution, or contemporary banking.

Once you suspend all your assumptions about our ability to continue the familiar arrangements of the present day, the future looks clouded indeed—at least when you gauge it in contrast to the sunny visions of thinkers and writers who see growth and innovation inevitably tracing an ever-uptrending curve of progress and prosperity. We are entering a difficult transition, and I doubt it will lead to the tech-nirvana that many are expecting. In fact, I think we are likely to lose many of the technological advances that we have come to take for granted, starting with the ubiquity of the Internet—which depends, after all, on a completely reliable electrical grid. We are heading into a contraction of techno-industrial activity and probably an eventual contraction of population. We have to make things smaller, more local, and finer.

If you could go back in time to 1950, to Cadillac Square in the center of downtown Detroit, and interview a proverbial man-on-the-street there about the future, he might have had a hard time grokking what actually happened to the place after 1970—the astounding devastation that would send his city into bankruptcy and receivership, capital flight, civic neglect, and a massive real estate crash, all without any war or epidemic laying siege to the city. Likewise, I think the American public fails to see the probable arc of the current story. We expect only more technological magic. Our superficial efforts to sidestep the inevitable conditions of radical decline—rather like an Instagram-tweaked image of the new Central Park—only distract us from preparing for the great discontinuities at hand.

James Howard Kunstler is the author of The Long Emergency, Too Much Magic, and the World Made by Hand series of novels.